The Future of Financial Advice: Masters in Business with Rich Steinmeier

Rich Steinmeier · LPL Financial

Automated tools will raise client expectations and won't end advisers, only simplistic ones.

Steinmeier rejects the view that automated advice will end the financial adviser's role. He argues that automated solutions will raise consumer expectations for the value advisers deliver. Against the backdrop of hyped automation, he expects the advice profession to rise to a higher standard instead of disappearing. Advisers who deliver advice in a simplistic way will face questions about their viability, but he says the overall outcome is a raising of the game. Earlier, he described his experience at UBS: the fear that robo-advisers would wash advisers away proved wrong, and the combination of technology and human advice can outperform either alone. He also holds that technology should lift advisers rather than displace them.

“The automated solutions are going to raise the expectations of consumers.”at 18:38

Rich Steinmeier · LPL Financial

Advisers are shifting toward 30% alternatives, and private assets should reach lower-asset clients as firms stay private longer.

LPL's research team has moved its model portfolio from a 60/40 mix toward a 40/30/30 mix, with 30% in alternative or uncorrelated assets. To support that, LPL spent about five years building its alternatives shelf, spanning ETFs, liquid funds and illiquid funds, with due diligence and an alternatives support desk. Rich says firms are staying private longer, so access to private equity and private credit is needed for a diversified portfolio. He supports legislation that would let these investments into ERISA and 401(k) plans, with proper diligence. He expects minimums to keep falling market-wide, though he calls the right threshold an active debate.

“we've looked from the evolution of that sixty forty portfolio to look something that looks more like a forty thirty thirty portfolio that's got 30% of those investments being alternative investments or non correlated assets.”at 53:22

Rich Steinmeier · LPL Financial

Rising investment thresholds to run a viable advice platform are forcing smaller firms out and driving consolidation.

Rich argues that the investment needed to be a competitive advice platform keeps rising, and many firms cannot meet it. Those firms conclude they cannot stay a viable going concern, so they sell or exit, which has driven the consolidation. He expects aggregators to look more like the W-2 employer firms that advisers left, which creates a second-generation issue. Contract enforceability for advisers who sold their businesses into aggregators is an open question. He expects the requirements for a strong platform to keep rising.

“What you've seen is a lot of firms who have said, I can't make those investments. I don't know how to be a viable going concern. And so I think they've opted out of the marketplace.”at 57:51

Rich Steinmeier · LPL Financial

AI will shrink the back-office share of adviser work, reversing today's 30/70 client-to-process split within a decade.

Rich says advisers spend about 30% of their time delivering advice and about 70% on process work. LPL is applying AI to shrink that 70%, targeting meeting prep, financial plan updates, tax planning and automated account opening with human approval. Internal workflows such as compliance reviews and money movement make up about 80% of the non-client work, so automating them is the main lever. Across advisory offices there are roughly 70-75,000 staff, and he expects much of their background work to be automated. He expects the split to invert over ten years to 70% client delivery and 30% process. That frees capacity to serve more clients, including those with lower asset levels than before, at roughly the same cost.

“if you look at that ten year arc, I think you will see the inversion of that kind of today is 30% client facing and 70% kind of process work. I think you will see that revert. I think you will see that be 70% of client delivery and 30% of the process work”at 59:05